New report says Wisconsin's regions move at different economic speeds

A simple truth: As the nation's employment total grew by 1.4%, Wisconsin's fell by 1.4%.

Those who wish to turn that into a political statement, though, would be wrong, because the numbers refer not to last month, or to last year, or to the administrations of Gov. Scott Walker or President Barack Obama.

The totals, contained in a new report by the Wisconsin Taxpayers Alliance, cover a 13-year period running from 2000 to 2012 — a period that began with Tommy Thompson in the governor's mansion and Bill Clinton in the White House and that subsequently covered all political constellations in both the state and nation.

The report, which encompassed two full cycles of recession and recovery, debunks the tendency to lump all of Wisconsin together as if it were a homogenous economic entity. In fact, various sections of the state traveled vastly different economic paths during the period of the study.

"What this research suggests is the need to shift preoccupation with short-term, statewide economic performance to a long-term view that recognizes the relative strength of individual regions and sectors," said Todd Berry, president of the nonpartisan, nonprofit Madison-based research group.

The researchers divided the state into six distinct regions that move at different economic speeds with diverse industrial profiles, per capita income levels and rates of job creation or loss.

Three of the regions (south central, western and Fox Valley-northeast) added jobs in the period, sometimes outstripping the national average. Three (southeast, northern, central) lost jobs, dragging down the state average.

Wisconsin's overall economic weakness, in other words, isn't a statewide, come-lately phenomenon that can be pinned on a single political party.

"Both sides of the aisle are so fixed on picking, choosing and, if necessary, manipulating economic data that they miss the trees for the forest, rather than the other way around," Berry said in an interview. "The politicos of all stripes are missing more important issues."

Among the findings in the report, titled "A Closer Look At Wisconsin's Economy":

■Employment rose 6.4% in the seven-county south central region, which includes Madison. Given that the capital includes the state's flagship research university as well as the state government, the finding wasn't a surprise.

■Southeastern Wisconsin, which has Milwaukee at its heart, lost 5.7% of its jobs since 2000, more than any of the other five regions. "Long a driver of statewide economic progress, that region has struggled as of late," the report said. However, the 10-county region "remains one of the most prosperous parts of the state, with per capita income ($42,068) that tops both the U.S. and Wisconsin." Statewide, it trails only the Madison region in that metric, the report said.

■The 20-county sector making up the study's sparsely populated northern region struggled with a 5.6% drop in employment in the period.

■What is a surprise, the organization said, is that western Wisconsin — the 18 counties clustered near the Mississippi River and along the Minnesota state line — showed brisk growth, with a 5% increase in employment. "Western Wisconsin not only added new jobs, it added better paying jobs," the report said.

"This is a wonderfully interesting report," said Brian Jacobsen, economist at Wells Fargo Funds Management in Menomonee Falls. "It is consistent with what I've been pointing out: Wisconsin is not a uniform entity with everyone rising and falling together."

Debunking finger-pointing

The Taxpayers Alliance produced the report in part to do away with the highly charged political finger-pointing that comes with each monthly release of state and national unemployment statistics. Those monthly figures are known to be riddled with inaccuracy and are "likely to result in flawed conclusions and less-than-ideal economic policies for the state," the group said.

"We didn't think there was much constructive, productive discussion going on about the Wisconsin economy," Berry said.

The researchers said they chose the 13-year increment deliberately, and only after looking at decades of data before deciding to begin cleanly with the start of a new millennium.

Politically, the period encompasses all configurations of party power in Madison. It began with the GOP administration of former Gov. Thompson, who held the office from 1987 to 2001, when he joined the White House administration of former President George W. Bush. That elevated his GOP replacement, Scott McCallum, to the governor's post until 2003, when he was replaced by Democrat Jim Doyle. After Doyle's two terms, Republican Gov. Walker took over in 2011.

The same period also saw multiple configurations of partisan Statehouse control, including periods of split legislatures, Berry said. And nationally, the White House and Congress similarly saw partisan shifts.

In terms of economic change, the period was a historic watershed in many ways. It encompasses the period when wholesale globalization and digital change began to bite and therefore shows how Wisconsin has reacted at a time of economic change. China joined the World Trade Organization in 2001, opening the world to an unprecedented level of wage and price competition.

The same period saw the spread of high-speed Internet and the emergence of virtual companies.

Wisconsin — if regarded as a single, unified economy — did not adapt well.

"In the 1990s, we generally matched or surpassed the U.S. economic performance," Berry said. But around 2003 or 2004, "you could see the two diverge, with us being on a slower growth trajectory."

Berry concedes that the report doesn't define the regions very clearly in terms of precise industrial composition. But he said the notion of dividing the state into regions does make sense in economic terms — with biotech and government in Madison, metalworking around Milwaukee and paper mills in the north, for instance — and in terms of culture as well. Some areas are Scandinavian, others German, for example. There also are political and religious differences, Berry said.

The report tends to use "manufacturing" as a monolithic category that lumps medical device manufacturing with machine shops, agricultural and mining equipment and paper mills. Nor does it have a category for biotech, which is crucial to Madison.

But the report does examine factors that are often overlooked in other reports, notably the correlation between population growth and job creation.

Areas with stagnant or falling populations, and therefore fewer young people to fill openings, had stagnant or falling employment levels. "Population trends affect job creation. Jobs cannot exist without workers to fill them," the report said.

In the fast-growing western Wisconsin region, for instance, population growth of 9.7% in the period outpaced the state's 6.3% rise.

The Wisconsin Taxpayers Alliance is one of the state's oldest public policy research groups and fiscal watchdogs. The 81-year-old organization was founded in the depths of the Depression to examine the state's policy responses to skyrocketing unemployment and devastated public finances.

The study's six regions, ranked according to job creation or loss:

South central

Despite a 28% drop in manufacturing jobs in the seven-county region — the steepest percentage drop in the state — south central Wisconsin generated non-farm jobs at the fastest clip in the state (6.4%). Job creation was led by job gains in Dane (11.4%) and Sauk (9.2%) counties.

That includes fast-growing companies like Verona-based medical software supplier Epic, which employs 6,800, triple its 2005 headcount, the report said.

The region benefits from advantages such as the relative stability of a government sector and a major research university that no other region can match.

Economic growth also raised the level of per capita income in the region to $42,368, "allowing south central Wisconsin to overtake the southeast as the highest income region in the state," the report said.

Western

The overall vibrancy of this region is one of the surprises. The report cites a diverse economic base, relative stability in its manufacturing sector and an easy commute to the Twin Cities.

Thirteen of the 18 counties in the region showed job gains: "The west grew robustly during 2000-12, outpacing more populous and wealthier regions, the state, and often the nation on a variety of measures."

Fox Valley-northeast

The region, which includes Green Bay, Door County and the Appleton region, is called "middle of the pack" for the state.

Its 1.4% increase in employment matches the U.S. average and far outstrips Wisconsin's negative 1.4%. The region had steady population growth and a relatively stable manufacturing base.

Central

The 1.4% decline in employment in the 10-county region matches the state average. Population growth was sluggish.

It's a relatively rural region with relatively low levels of income and wages. "This is to be expected since much of the area has limited access to major highways," the report said.

Northern

The north was the only region to shed population (-1.0%) and its job losses (-5.6%) were among the state's largest.

Although it accounts for a third of the state's land area, the 20-county northern Wisconsin region accounts for only 7.5% of its population, "down from 8.1% in 2000." It had the lowest per capita income ($33,741) in 2011, well below the state average ($39,575).

The forested area is popular for outdoor activities and tourism, centered around towns like Hayward and Minocqua. And one of the biggest blows to the region was a decline in the tourism business, measured in a 14.6% decline in leisure-hospitality employment.

Southeast

The report calls the state's southeastern flank its "shrinking giant." Its population growth has lagged the state. Since 2000, the southeast has lost 5.7% of its jobs, more than any of the other five regions.

Included in that total was a 27.4% drop in manufacturing employment, the report said, a larger decline than statewide (-23.5%), though less than the nation (-31.2%). Milwaukee County's population increased less than 1% during the period, while its employment fell 11.3%.

"Milwaukee has been sticking out like a sore thumb relative to other communities in terms of employment and income," Wells Fargo's Jacobsen said.